Port of L.A. approves lease for BNSF

Friday, March 22, 2013

The Los Angeles Harbor Commission on Thursday approved a 50-year development agreement and lease for BNSF Railway to construct, operate and maintain an intermodal container transfer facility on port property in nearby Wilmington that proponents say would improve cargo handling efficiency.
Currently, import containers that don't move inland from the dock as a block on unit trains are trucked 24 miles downtown to the City of Commerce to BNSF's Hobart Yard. The near-dock intermodal facility would reduce about 1.3 million truck trips annually, according to the Port of Los Angeles.
The commission two weeks ago approved the Environmental Impact Report for the proposed project on a site four miles north of the port. BNSF has said it plans to invest $500 million to develop the 185-acre facility.
BNSF would pay estimated annual rent of $6.3 million to the port during the development period, and $7.8 million annually for the first five years of operation, with rent adjusted to market conditions thereafter, according to port staff. In addition, the port authority would receive fees for each container handled by BNSF.
The agreements were approved 4-0. Commissioner Sung Won Son abstained, saying he did not have enough time to review new documents presented to the commission and because of concerns about potential job losses.
Several existing tenants of the port property are in danger of closing if they cannot be successfully relocated. California Cartage President Robert Curry asked commissioners during the public meeting to insist that BNSF help the company relocate to another suitable location or provide financial assistance to enable the company to move. Cal Cartage is a major drayage and warehouse company that specializes in transloading ocean containers into larger domestic containers moving across the United States for customers such as Home Depot, Target, Suzuki and New Balance. Last year it handled more than 100,000 TEUs. Cal Cartage occupies about 90 percent of the existing property that is being repurposed for BNSF's Southern California International Gateway (SCIG).
Representatives for L.A. Harbor Grain Terminal requested the Harbor Commission direct port staff to identify a vacant plot of port property for relocation and that lease approval be postponed for a short period until a compensation package could be worked out with BNSF. L.A. Harbor Grain is an export transloader, receiving rail cars and domestic trucks full of hay, alfalfa, soybeans and other grains that are transferred into 40-foot ocean containers. It loads about 20,000 TEUs per year.
Negotiations with BNSF have been productive, but reaching agreement has been difficult without knowing what land is available, they said. A motion for a two-week continuance failed.
San Pedro Fork Lift is another company that faces an existential threat from the SCIG. The company has 10 employees that work in proximity to L.A. Harbor Grain. It handles 70 percent of the fumigation of imported agricultural goods at the Port of Los Angeles. A company representative said talks with BNSF were ongoing and a potential site for the business was under review.
Three Rivers Trucking, which occupies about 15 acres on the planned development site, is a refrigerated carrier that moves export produce from the San Joaquin Valley in Central California to West Coast ports. Despite the longer distance to Southern California, it delivers four times as much produce to Los Angeles and Long Beach than to the Port of Oakland. A company official said the company is in talks with BNSF, but without another location on a heavyweight corridor it would have to steer business back to Oakland.
The BNSF lease, as well as an appeal of the Environmental Impact Report, now go to to the Los Angeles City Council, which has the authority to approve or deny the lease, or send it back for modification.
Construction of the yard, pending approval, is due to begin later this year. It is expected to open in 2016 and initially handle 570,800 TEUs. By 2035, SCIG is projected to handle a maximum of 2.8 million TEUs. - Eric Kulisch